Doug Mewhirter, Equity Analyst at SunTrust Robinson Humphrey, says that some companies are not going to come out ahead as a result of the sale of GE Capital’s sponsor finance business. In the near term, he says Ares Capital Corporation (ARCC) is likely to be one of those companies.
“Ares Capital has a very successful joint venture with GE Capital that has been a great source of very profitable loans that Ares has shared with GE Capital over the many years,” Mewhirter says. “It has been highly successful, and it is one of the things that many people have tried to copy, and no one has been really able to duplicate it with the success that Ares had.”
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Mewhirter says that joint venture is probably going to end. As a result, Ares is going to need to find a new partner.
“I am very confident they will find a new partner because they are a great company, and a lot of institutional investors will want to work with Ares, but there will probably be a little bit of period of uncertainly until they get all that sorted out,” he says.